Goodbye Business Plan?
By David Madié
There is a new tool in town. The StartupWheel® is challenging the conventional business plan and introducing a new approach for startups to make decisions and take action
Five years ago, I was asked to talk to a group of student entrepreneurs about how I in seven years built an Internet company that grew from three partners to five international offices and 70 employees before selling it to investors. The question was simple—how can such a thing be done?—but the answer was more complicated. The success and the process of starting and growing a company could not be explained by a few ideas or tricks. So I was wondering what would be a proper way for me to give the eager entrepreneurs a recipe they could use on their own?
Avoiding this hard question, I resolved to talk about writing a business plan. However, after only 10 minutes into the presentation one student raised his hand. “David, tell me. Did you ever write a business plan yourself?” Having to honestly answer “No I didn’t.” only led to the next foreseeable question from the student: “Why then are you teaching us?!”
On the spot, I was struck by being confronted with not taking my own medicine, and realized that the rest of the session had to be about real life entrepreneurship. But also it dawned on me that something was wrong in the whole way entrepreneurs were getting advice and training across the board. After the session another question remained on my mind: “Why is everybody teaching entrepreneurs to write a business plan if most successful entrepreneurs never wrote one?”
The Question Became a Company
Shortly after, this question was turned into my next company. It was named Startup Company Inc., and a business plan was never written before its foundation. Instead, the company was focused on getting speaking engagements at universities, and shortly after we were hired to run a full semester course in entrepreneurship at Copenhagen University in Denmark, where I was living before moving to New York City.
For this course, Startup Company developed 80 simple, visual, and practical Startup Worksheets that the students were using to create a business, rather than thinking about it and writing about it. The tools developed for these student entrepreneurs became the foundation for the StartupWheel Tools and Process, that today are licensed by professors, business advisers, and incubator managers around the world.
Perspective on Decisions and Actions
It has occurred to me that the process of starting a business is really a matter of making 100 decisions and talking about 1,000 actions. Literally. And probably at least. The StartupWheel was created to support this process by structuring all these decisions and actions into four basic challenges and 20 key development areas. The four challenges are some that all businesses—no matter size, industry, or life stage—are facing, and facing at all times. These are 1) to develop an attractive business concept, 2) build a strong organization behind it, 3) develop lasting customer relations, and 4) to have effective operations. When a company is not getting off the ground, not growing, or not making money, one of the 20 associated development areas needs work.
The StartupWheel is using this framework to take a 360-degree perspective on the business to find out what to focus on just now. Is the problem that the company is not selling enough? Is it that the products are not developed enough? That it must hire more staff to really sell more, or perhaps that prices need to be changed to sell more?
Once the first one to three focus areas have been identified, the idea in the StartupWheel is to leave the rest behind, only to deal with the most important areas first. Something that can be done by using the tools in the StartupWheel concept which breaks the decisions down to bite-size pieces.
One of the ways the StartupWheel does this is by providing the student with a selection of visual Worksheets in 11x17 format—or downloaded as PDF—which assists decision making and action planning one issue at a time. The worksheets are supported by visual Frameworks to clarify the agenda at hand, and there also are articles with checklists to inspire the students and entrepreneurs in the process.
First at Babson College
The StartupWheel was first presented in the U.S. in 2006—while still in the making—at the Babson Symposium for Entrepreneur Educators (SEE), where I was participating as the entrepreneur teaming up with a professor. This became a life-changing event when Susan Sanderson, an entrepreneurship professor at Rensselaer Polytechnic Institute, approached me after the presentation and told me she believed the material filled a gap in existing methodologies for teaching entrepreneurship.
The core elements in this methodology is first of all to explain business topics in a simple and visual way without using abstract or theoretic management terms, but rather focus on the actual practical decisions that needs to be made to move the business forward within the next 30, 60, or 90 days. Decisions would involve “how should we design our product” or “which trade-show should we go to first.” Secondly, the methodology is strictly focusing on identifying action items so any strategic or practical decision is made operational and doable, by identifying the actionable steps that need to be taken now. In the classroom, this approach enables better opportunity for action learning, where the students can test their ideas in real life, or even work on a business idea that might be for real one day. In the next semester following the Babson SEE, the StartupWheel was used at RPI Lally School of Management, and has been so ever since. But, more importantly, this first client on U.S. soil encouraged me to move our business to New York City where we are based today.
From first being used by university professors, the StartupWheel later received attention from the Danish government, and has during the last two years been rolled out nationwide in Denmark, where it is used by all government-funded SBDCs and business incubators. In the United States, the StartupWheel has been adopted by professors and advisers in as different organizations as Rensselaer Polytechnic Institute (engineering), Pratt Institute (design), NYU ACRE (Clean Tech Accelerator), and TECH Fort Worth (Software incubator).
A New Big Question Is Being Crowd-sourced
There is a new big question which I and my team of six are trying to answer today. The question is: How do we become even better in helping entrepreneurs make decisions and take action?
But, this time we are not on our own. Joining in this quest is the more than 250 consultants and professors who have been certified and licensed to use the StartupWheel. This group, growing by 10 every month, has become co-creators of the StartupWheel by submitting their personal ideas for improvements that have become part of the quarterly updates of the concept.
These ideas, which this crowd-sourcing provides, all originate from dialogues with thousands of entrepreneurs. Entrepreneurs who either never wrote conventional business plan or never used the one they once wrote. But, entrepreneurs still need a systematic and motivating process to move their business forward.
The simple way to do just that is to focus on what other successful entrepreneurs have always done. To make decisions and take actions. The natural way of the entrepreneur.
Read more about the StartupWheel® at www.startupwheel.com. David can be reached at +1-917-741-0061 or email@example.com.